Public goods theory has been a cornerstone of the economic theory of the public sector since the 1950s. Inspired by a pair of path-breaking articles by Paul Samuelson, published in 1954 and 1955, the economics profession has accepted a rigorous definition of the term “public good” and has used the concept of a public good to outline a role for government production in the economy. Public goods theory purports to show why goods with the rigorously defined characteristics of publicness cannot be produced efficiently by the private sector of the economy, creating a market failure which implies a role for government in the production of those goods for which the market fails.
KeywordsPublic Good Public Choice Market Failure Private Good National Defense
Unable to display preview. Download preview PDF.
- 1.Richard A. Musgrave, The Theory of Public Finance ( New York: McGraw Hill, 1959 ), p. 44.Google Scholar
- 2.Francis M. Bator, “The Anatomy of Market Failure,” Quarterly Journal of Economics 72: 3, August 1958.Google Scholar
- 3.An exception is Jora R. Minasian, “Television Pricing and the Theory of Public Goods,” Journal of Law and Economics 7, October 1964.Google Scholar
- 4.James Buchanan, “Public Finance and Public Choice,” National Tax Journal 28: 4, December 1975.Google Scholar
- 5.See Harold M. Hochman and James D. Rogers, “Pareto Optimal Redistribution,” American Economic Review 59, September 1969.Google Scholar
- 6.Jeffrey Rogers Hummel and Don Levoie, “National Defense and the Public goods Problem,” Journal des Economistes et des Etudes Humaines 5:2–3, June—September 1994.Google Scholar
- 9.Randall G. Holcombe, “A Theory of the Theory of Public Goods,” Review of Austrian Economics 10: 1, January 1997.Google Scholar
- 10.See Buchanan, op. cit.Google Scholar
- 12.Murray Edelman, The Symbolic Uses of Politics ( Urbana, Ill.: University of Illinois Press, 1964 ).Google Scholar
- 13.Anthony Downs, An Economic Theory of Democracy ( New York: Harper Row, 1957 ).Google Scholar
- 14.Steven Kelman, “ Public Choice’ and Public Spirit,” Public Interest 87, Spring 1987.Google Scholar